October 26, 2003
Corporate welfare thrives in Florida; Wal-Mart sucks
In Florida, a state that is racing third world countries to the bottom of the wage scale, companies like WalMart, which place bets on the impending demise of their employees (see excerpt below) and are known for driving local businesses into the ground, are rewarded with generous tax breaks and outright subsidies regressively financed by the poor. Speaking of poorly paid janitors, WalMart’s cleaning companies entry level wages start at $2.00 per DAY.
Why do we let our elected representatives continue to get away with cutting social services, education, health care, and other absolutely necessary programs while throwing hundreds of millions of dollars at corporate pigs?
Carnival Corp., Florida's 10th-largest public company with 4,220 South Florida employees and a $136-million state payroll, posted more than $1-billion in profits last year.It also paid nothing in Florida corporate income tax.
......In fact, 98 percent of the estimated 1.5-million businesses in Florida paid nothing. And many of those that did pay found ways to reduce their tax bills.
At a time when Florida is scraping for every dollar to improve education, build roads and prisons and buy prescription drugs for the poor, Florida's corporate income tax is all but dead.
......** As the corporate tax percentage declines, the state's reliance on the sales tax - which hits the poorest Floridians five times harder than the richest - is growing.
** By one state estimate, legal exemptions, credits, deductions and loopholes cost Florida $1.2-billion a year - more than the corporate tax generates.
In a state with a $53.5-billion budget, $1.2-billion would be enough to hire 28,000 teachers or build 3,500 classrooms or bring teachers' salaries in line with the national average.
It would be enough to build 30,000 prison beds or 425 miles of two-lane roads. Or enough to provide prescription drug coverage for 50,000 seniors for more than a decade.
......
"There's a good side to it," said Jim Zingale, executive director of the Department of Revenue. "We appear to have a strong business climate today that we didn't have in past recessions."
State officials also stressed that many of the zero-paying businesses are small. And even if businesses don't pay a corporate tax, they usually pay property, unemployment, sales and use taxes as well as annual filing fees. They employ tens of thousands of Floridians who also pay sales and property taxes.
......Bush administration officials also argue that the low-tax culture is a key reason Florida continues to create jobs.
......"Dead janitor insurance'
Corporate shelters designed to avoid federal taxes also cost Florida revenue.
......Take Florida's third largest public company, Winn-Dixie Stores Inc. From 1993 through 1997, the Jacksonville-based supermarket chain used a tax shelter later deemed a "sham" by U.S. courts.
It took out life insurance - payable to the company - on more than 36,000 employees. The premiums, like any employee benefit, were considered a tax-deductible business expense.
Until Congress cracked down in 1996, dozens of businesses adopted a similar tactic: They bought insurance policies and collected when low-level employees died. The cash payments were also tax free.
......Another firm that took out life insurance on its rank-and-file workers is Wal-Mart Stores Inc., the world's largest retailer. It employs 76,400 Floridians and operates 192 stores and four distribution centers in the state.
"We saw COLI as a possible way to reduce our corporate income taxes which, in turn, could help us defray the rising cost of providing health care benefits to our people," Wal-Mart spokesman Tom Williams said in an e-mail. "As it turned out, the program did not work out well for us."
First, families of some Wal-Mart employees sued, saying the company purchased the policies without their knowledge and cashed in after their loved ones died. They want some of the proceeds.
Then, in a lawsuit filed in Delaware, Wal-Mart attorneys said the retail giant had settled with the IRS in August 2002 for a "substantial unanticipated tax liability ... under threat of litigation."
"It's especially bad when your employer has an interest in your early demise," said Scott Clearman, an attorney for the workers.
......America's No. 1 store is also among the nation's largest taxpayers, paying $57-million in Florida property, unemployment and income tax last year. It declined to say how much of that was state corporate income tax.
But considering its $244.5-billion in sales and $12.7-billion in pretax income, Wal-Mart still pays a relatively small amount of income taxes to states.
Tax credits
Like many large corporations, Wal-Mart also takes advantage of state tax credits. Florida offers them to firms that create jobs in enterprise zones, which are rural or urban areas targeted for economic revitalization.
Businesses can also get credits if they do research, provide child care or contribute to charity. And while some states are cutting back on the use of credits, contending that the giveaways hurt other taxpayers, Florida keeps approving more.
With the help of Gov. Bush, Wal-Mart qualified for tax refunds of up to $2.88-million for building a grocery distribution center near the northeast Florida town of Macclenny.
In its application for the tax break, Wal-Mart played the Sunshine State against the Peach State: "In the event our application is denied, we would pursue to expand in Georgia. Our capital investment of $40-million and 600 jobs would be welcome in Camden County."
Florida won the bidding. "They (Florida) threw everything at Wal-Mart to make the project happen," a message in a state file says.
Wal-Mart said it already has received $540,000 for the Macclenny project and expects the rest over the next four years.
In 2001, Bush's office also agreed to a deal worth $539,000 after Wal-Mart opened a store in Florida City.
Although Florida is more than willing to sanction corporate handouts, state officials are less willing to discuss how they are used. Neither Florida nor Wal-Mart would say if it is getting the breaks on its corporate taxes, sales taxes or both.
Wal-Mart said it has created more than 1,200 jobs in exchange for all the credits, but it stressed that it doesn't rely on government subsidies. In the past three years, Wal-Mart said, it has added 15,000 people to its Florida payroll.
And. pray tell, how may of those jobs were janitors making $2 per day?
Finally, some feel that Wal-Mart threatens our way of life:
Wal-Mart is powerful; Wal-Mart is the American worker's nightmare:Posted by Norwood at October 26, 2003 11:02 AMLow wages: Nearly half of Wal-Mart's workers earn less than the federal annual poverty income for a family of three - $15,300 per year.
Few benefits: 700,000 of the workers get no health care from Wal-Mart. The rest who do pay for it.
Little retirement: No retirement plan is provided for 35 percent of the workers. The other 65 percent are in the Wal-Mart profit sharing and 401(k) plans. And most of the investment is in Wal-Mart stock - shades of Enron.
Low wages, little health care and retirement - what else could be wrong? Thousands of workers are suing Wal-Mart because some managers force people to work unpaid overtime. Thousands more are suing for gender discrimination. Women comprise 70 percent of Wal-Mart's workers and many are suing over promotion and pay inequality.
